Stablecoins Boost Crypto Market Recovery and Future Growth
The Importance of Stablecoins for the Future of the Crypto Market
Stablecoins play a crucial role in the recovery of the crypto market. Prior to the recent crypto market rally in late October, about 3.54% of the circulating supply of stablecoin USDT were deposited on exchanges.
The end of the year in full bloom
The global market capitalization has increased by 34% since mid-October, which corresponds to an increase of nearly 360 billion dollars to the current time. With rising valuations, the market’s trading activity experienced a strong turnaround. The daily volumes were on average close to 50 billion dollars in the last month, a welcome change to the 25 to 30 billion dollars that were recorded in the last two quarters.
Stablecoins as a key to market recovery?
The on-chain analysis firm Santiment pointed out key developments that could have strongly supported the ongoing rally. In the period from August 19th to October 16th, about 3.54% of the circulating supply of the stablecoin Tether [USDT] were deposited on exchanges. In absolute numbers, this corresponds to a flight of more than 3 billion USDT tokens.
In addition, about 0.72% of the total supply of USD Coin [USDC] was introduced to exchanges at the same time. Such large inflows typically act as bullish signals for the market. This is because investors who send stablecoins are likely to do so to buy other cryptocurrencies.
As is well known, stablecoins are the primary method for traders on non-fiat crypto exchanges to enter and exit trades. Stablecoins allow traders to retain their fiat value without leaving the blockchain and exiting. Therefore, increases in stablecoin deposits are a precursor to strong trading activities in the market.
The development of stablecoins
The circulating supply of ERC-20 stablecoins has experienced a notable increase in the last two weeks. A continued increase in the market capitalization of stablecoins would support the notion of a market recovery.
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Stablecoins are crucial for the future of the crypto market. They provide a stable currency in an otherwise volatile crypto world and allow traders to retain their fiat values without leaving the blockchain.
Sources: AMBCrypto, CoinMarketCap, Santiment, CryptoQuant
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